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Sunil Wadhwa and Lynn Lori Wadhwa v. Aurora Loan Services

July 8, 2011



I. Factual and Procedural Background

On July 6, 2011, plaintiffs filed a complaint against Aurora Loan Services, LLC (Aurora), Capitol One Mortgage Corporation and Mortgage Electronic Registration Systems, Inc. (MERS), alleging causes of action for fraudulent misrepresentation, breach of fiduciary duty, unjust enrichment, civil conspiracy, quiet title, usury and fraud, wrongful foreclosure and breach of security interest, all stemming from the purchase of and foreclosure on the real property located at 3055 Orbetello Way, El Dorado Hills, California. ECF No. 1 at 1.

On July 7, 2011, they filed a motion for a temporary restraining order (TRO), seeking an order directing the defendants "from conducting the trustee's sale" against the subject property and arguing that a TRO should issue so that plaintiffs will not be evicted from their home. ECF No. 6 at 2. At a different place in the moving papers, plaintiffs say they are seeking to restrain defendants "from carrying out any unlawful detainer action and/or forcing plaintiffs to vacate their home. . . ," reselling plaintiffs' home, or displacing plaintiffs from the subject property. ECF No. 6-1 at 2. At yet another place in the papers, they state, "Plaintiffs are now facing the loss of their home in an unlawful detainer trial scheduled for July 11, 2011." ECF No. 6-2 at 1. In the conclusion section of the points and authorities in support of their TRO application, plaintiffs ask for an order directing defendants to "refrain from reselling, or otherwise transferring, encumbering, hypothecating to any third party the Subject Property . . .or displacing Plaintiffs from the Subject Property during the pendency of this proceeding." ECF No. 6-2 at 21. The documents submitted with their complaint and TRO show that a trustee's sale of the property was held on October 18, 2010 and that the Trustee's Deed was recorded on October 25, 2010, granting the property to defendant Aurora. ECF No. 1 at 60-61. It thus appears that plaintiffs seek an order preventing their eviction from the home during the pendency of this action.

Counsel has submitted a declaration "as required by California Code of Civil Procedure § 1005(b)," averring that he sent notification of this motion to defendants Aurora and MERS "on June 7, 2011," but that no one on behalf of defendant Capitol One Mortgage gave him a FAX number. ECF No. 6-4 at 1-2. The court deems this notice to be the equivalent of the notice required by Local Rule 231; see also FED.R.CIV. P. 65(b). In addition, the court directed plaintiffs' counsel to notify defendants of their right to file an opposition no later than noon on July 8, 2011; counsel has filed a certificate of service of the minute order on defendants. Defendants have not opposed the motion.

II. Standard For The Issuance Of A Temporary Restraining Order

A temporary restraining order may be issued upon a showing "that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition." FED.R.CIV. P. 65(b)(1)(A). The purpose of such an order is to preserve the status quo and to prevent irreparable harm "just so long as is necessary to hold a hearing, and no longer." Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 439 (1974). In determining whether to issue a temporary restraining order, a court applies the factors that guide the evaluation of a request for preliminary injunctive relief: whether the moving party "is likely to succeed on the merits, . . . likely to suffer irreparable harm in the absence of preliminary relief, . . . the balance of equities tips in [its] favor, and . . . an injunction is in the public interest." Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 129 S.Ct. 365, 374 (2008); see Stuhlbarg Int'l. Sales Co., Inc. v. John D. Brush & Co., Inc., 240 F.3d 832, 839 n.7 (9th Cir. 2001) (analyses for temporary restraining order and preliminary injunction "substantially identical").

III. The Deed Of Trust And Foreclosure

On November 28, 2006, plaintiffs signed a Deed of Trust for the subject property, which named GreenPoint Mortgage Funding as the Lender, Marin Conveyancing Corporation as the Trustee, and MERS as the nominee for Lender and lender's assigns and the beneficiary under the Deed of Trust. ECF No.1 at 32-33. Plaintiffs granted the power of sale to the Trustee. ECF No.1 at 34. Lender GreenPoint reserved the right to substitute the trustee by an instrument "executed and acknowledged" by the Lender and recorded in the appropriate recorder's office. ECF No. 1 at 45

The Deed of Trust included this language:

Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

ECF No. 1 at 34. Finally, the deed notified plaintiffs that "the Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower," and explained that such a sale might result in a change in the loan servicer. ECF No. 1. at 43.

A Notice of Default and Election To Sell was recorded in the El Dorado County Recorder's office on October 18, 2009.*fn1 The document is dated October 15, 2009, and above the signature line is printed "Quality Loan Service Corp., AS AGENT FOR BENEFICIARY By: Service Link-Irvine." ECF No. 1 at 50. The document is actually signed "C Banse As Agent." It contains a paragraph reciting that the beneficiary or its authorized agent "has contacted the borrower, tried with due diligence to contact the Borrower as required by California Civil Code § 2923.5. . . " Id. An attached declaration from Aurora Loan Services indicates that notice was sent to the Borrower on September 2, 2009. ECF No. 1 at 51-52.

Plaintiffs have provided a copy of a Substitution of Trustee whereby MERS substituted Quality Loan Service Corporation as Trustee with a printed date of October 15, 2009. The Substitution is signed by Mary Jane Sarne, Vice-President. The notary's acknowledgment is dated October 26, 2009.*fn2 ECF No. 1 at 54-55.

Quality Loan Service recorded a Notice of Sale on January 21, 2010; it is signed by Earl Horida as ...

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